Vodafone Sees Loss of UK Market Share and Lower ARPUs

Published on: 22nd Apr 2009

Note -- this news article is more than a year old.

The UK added over 3m new mobile connections during 2008, to take the total base to 75.75m, equivalent to 124% penetration. The market is one of the most competitive in Europe, if not the world, with five established MNOs and several MVNOs, of which the most successful are Virgin and the increasingly ambitious Tesco.

The year saw few real changes in status between any of the four largest
operators, with market leader O2 gaining 60bp to achieve a share of 28.3%,
second placed Vodafone losing 10bp to settle at 25.3%, Orange dropping
40bp to 21.1% and T-Mobile (the most severely affected of the lot) dropping
180bp to 19.4%. Roughly half of this was attributable to the fall in Virgin's
share, which began the year at 6.2% of the total and ended it at 5.4%. The
main consequence of this move is that Virgin - with 4.11m customers - has
now fallen behind H3G, which has an estimated total of 4.42m.

ARPUs have continued to come under pressure, especially at those
operators which report numbers in Euros. Vodafone has seen its average
drop from £22.5 to £21.5, while O2 and T-Mobile have reported declines of
€4.8 (to €28.1) and €5 (to €26.0) respectively. Orange, which uses
rolling
averages, saw an increase in Sterling terms, up from £265 to £272, but this
number is not entirely comparable to those seen at the other companies.
Hutchison's numbers are not included in The Mobile World Database, for
two reasons. First, they refer to both the UK and Ireland - which is a very
different market and rather more lucrative - and second, they are stated
gross of incentive and acquisition costs, which alters the picture beyond
recognition.

A final, rather different point, is worth noting. This is the proportion of
revenue each of the main operates derives from non-voice services.
Vodafone's has stopped reporting this but the H1 financials suggest a figure
of 28.4%, well clear of the 22.0% seen at T-Mobile and the 23.2% at Orange
but a far cry from the 35.6% seen at O2 this last quarter. Could this all be
due to the iPhone? If it is, the premium O2 pays for the privilege of
distributing the device could well be justified.